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Housing data has stocks building gains

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The market has responded favorably to this morning's economic data with the Dow Industrials (INDU) 8,697 +1.11% gaining 95 points, the broader S&P 500 Index (SPX.X) 943 +1.05% posting a 9.8-point gain, and NASDAQ-100 Index (NDX.X) 1,156 +2.3% jumping 26 points on a stronger-than-forecasted April new home sales report.

New home sales rose 1.7% in April to a 1.028 million rate, which was well above economist's forecast for a 985,000 annual rate. Existing home sales also came in better than forecasted rising 5.6% to a 5.84 million annual rate, which was better than the 5.7 million rate forecasted by economists.

Other economic data released had consumer confidence rising to 83.8 in May, from April's 81 reading, but May's reading was slightly below forecast of 85.4.

While the major market averages stalled in the red on the release of today's consumer confidence data, the strong showing from new home sales brought in buyers for the major indexes and have propelled them to their morning highs.

S&P 500 Index Chart - Daily Interval

When the SPX took out our DAILY R1 of 936.47, the rush was on and gains have built to the 944 level, which was a short-term bullish trader's target from Thursday. With a little "zone of resistance" just ahead from WEEKLY R1 of 947.66-950, I'm suggesting bulls either look to take profits at their targets, or not give back much more than the 937 level. I did see some intra-morning selling at the 937.49 level for about 10-minutes this morning and would look for intra-day support to build at that level.

Jeff Bailey

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